Most of us small real estate investors buying and renting single-family homes are accused of making every dollar count. It is that habit that makes us make foolish decisions when advertising a house for rent.
Just take a look at the Home For Rent classified section of your newspaper. You’ll see rows of two- or three-line ads that seem to jumble together in an uninspired balloon. Yes, I know newspaper ads are expensive, but have you ever stopped to think how much a three line ad is really costing you? Let’s do some logical thinking about this penny saving.
In our example, we will use a rental home where you have a monthly mortgage payment of $850. That includes principal, interest, taxes and insurance. You are offering the house for rent at $900 per month. If you divide your monthly mortgage payment by 30, you’ll find it’s costing you $28.33 to own your home. That’s $198.33 per week. So every week the house is vacant you are losing $198.33. Eliminating two weeks of that slot will save you $396.66.
If you’re saving a penny with a small three-line ad that fails to find a tenant for weeks, you’re looking at $198.33 slipping through your fingers every week. That’s when you should realize that it makes business sense to buy a nice, big classified ad, which will give you the best chance of getting a renter’s attention the first time it’s posted.
Filling vacancies quickly is the mark of a good investor. As soon as your current tenant gives you the required 30-day notice that they are leaving the property, you must take action. Your goal should be to have a new tenant ready to move in the day the old one moves out. Do this…
1. Ask your current tenant if they know anyone looking for a rental. Ask them to spread the word to their friends and coworkers. If you have a good relationship with the tenant, you should be willing to help them find a tenant. Offer them a hundred or two hundred dollar reward if they find you a new tenant before you move out.
2. Immediately post a For Rent sign on the property with brochures describing the property and the rental cost. We have a page on our website for each property we own with internal and external photos. Listed on the page about room dimensions and the location of nearby features such as schools, hospitals, shops, public transportation, etc. We include the website address on the For Rent sign and flyers.
3. We send out a postcard announcing that a rental will be available for neighbors. They may have friends who would like to live nearby. We offer a $100 or $200 cash reward if we rent to someone who refers us before the current tenant leaves.
4. We distribute flyers to nearby businesses such as hair salons, nail salons, dry cleaners, etc. We make them the same cash reward offer as the neighbors.
Stingy people don’t do those things and they pay dearly for their mistake.